Everett forecast warns of $15 million‑plus structural deficit in 2027; council discusses reserves and assumptions
Loading...
Summary
Interim Finance Director Mike Bailey told the council the long‑range forecast shows a structural deficit of more than $15 million in 2027 if unaddressed; the council probed assumptions including vacancy savings, a $5.4 million budget variance and the city’s 20% fund‑balance target.
Mike Bailey, interim finance director, told the Everett Budget Committee that the city’s long‑range forecast continues to show a projected structural deficit in excess of $15 million in 2027 if no corrective measures are taken. He described the forecast as detailed and built from many entries and assumptions published in the city’s budget book.
Bailey said the forecast includes two built‑in offsets: an anticipated vacancy savings rate and a budget variance representing expected under‑expenditure. He cited a $5,400,000 budget variance in the 2027 forecast and said the city used a conservative estimate of vacancy savings rather than assuming full (0%) staffing. “We again, the numbers continue to reflect what we talked about at the retreat, a a deficit in in excess of of 15, plus million dollars in in 2027,” Bailey said.
He noted the city ended 2025 with roughly $50,000,000 in general‑government fund balance because departments underspent the authorized budget by more than $10,000,000. Bailey warned that without proactive changes the forecasted gap would reduce the city’s ability to respond to shocks: the crossing‑lines chart shows revenues and expenditures converging and indicates the city could fall below its fund‑balance target in about 1½–2 years.
Councilmembers pressed on assumptions behind the numbers. Bailey confirmed that about 75% of the general‑government budget is compensation, meaning a large share of underspending stems from vacancies; he said vacancy forecasting is improving but that the vacancy offset currently lives in a nondepartmental line item. One councilmember asked whether reserve funds are earning interest; Bailey confirmed they are.
Bailey suggested the council consider how the dedicated cumulative reserve fund relates to the 20% general‑fund target and whether some reserves could be put to work. He emphasized the forecast will change as new data arrive and recommended the council remain proactive in planning rather than alarmed by moving numbers.
The committee did not adopt any formal measures at the meeting; staff were asked to provide requested clarifications and the report concluded with adjournment.
